Correlation Between Sapiens International and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Sapiens International and Summit Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sapiens International and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapiens International and Summit Materials, you can compare the effects of market volatilities on Sapiens International and Summit Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sapiens International with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and Summit Materials.
Diversification Opportunities for Sapiens International and Summit Materials
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sapiens and Summit is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Sapiens International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sapiens International are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Sapiens International i.e., Sapiens International and Summit Materials go up and down completely randomly.
Pair Corralation between Sapiens International and Summit Materials
Given the investment horizon of 90 days Sapiens International is expected to under-perform the Summit Materials. In addition to that, Sapiens International is 2.61 times more volatile than Summit Materials. It trades about -0.21 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.19 per unit of volatility. If you would invest 4,670 in Summit Materials on September 4, 2024 and sell it today you would earn a total of 422.00 from holding Summit Materials or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sapiens International vs. Summit Materials
Performance |
| Timeline |
| Sapiens International |
| Summit Materials |
Sapiens International and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapiens International and Summit Materials
The main advantage of trading using opposite Sapiens International and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International position performs unexpectedly, Summit Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Summit Materials will offset losses from the drop in Summit Materials' long position.| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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